Which item would typically be considered a current asset on a balance sheet?

Which item would typically be considered a current asset on a balance sheet?

• A. Cash
• B. Land
• C. Buildings
• D. Long-term investments

Answer: (A)

Current assets are resources a farm business expects to convert to cash or use up within one year. This is why cash is listed as a current asset—it is already cash and can be spent immediately to cover short-term needs like expenses or payroll. Land and buildings are long-term, fixed assets because they’re used over many years and aren’t quickly turned into cash. Long-term investments are assets held beyond a year for longer-term returns, not for day-to-day operations, so they’re also noncurrent. So cash is the item that would typically be shown as a current asset.

Current assets are resources a farm business expects to convert to cash or use up within one year. This is why cash is listed as a current asset—it is already cash and can be spent immediately to cover short-term needs like expenses or payroll. Land and buildings are long-term, fixed assets because they’re used over many years and aren’t quickly turned into cash. Long-term investments are assets held beyond a year for longer-term returns, not for day-to-day operations, so they’re also noncurrent. So cash is the item that would typically be shown as a current asset.